Based on our review, which is still on going, we believe that the Alexander Report (released on January 10, 2014)

creates a scenario that is inconsistent with assumptions and forecasts made by other highly regarded sources typically relied upon in such analyses and failed to point out any of the benefits of expansion. We have highlighted some, but not all, of our concerns with the report as follows: (1) inconsistent assumptions; (2) what we believe are errors in the report; and (3) what we believe is missing from the report. Inconsistent Assumptions with other sources: Poverty Growth Rates are at odds with a consensus of other credible sources. Although the report does not clearly state the poverty rate used it appears to suggest a 32% increase over the period resulting in an unprecedented 18% poverty rate in 2022. This rate is far higher than the poverty rate in the depths of the recent recession. o Maines Revenue Forecasting Commission predicts a steady decline in the unemployment rate between 2013 and 2017 estimating a 28% decline during this period. The unemployment rate traditionally trends with the poverty rate. o The Congressional Budget Office shows a steady decline in SNAP participation nationally beginning in 2014 and continuing through 2023. This is another strong indicator of the poverty rate. Already Maines SNAP participation began to decline in 2013 over 2012 levels and has dropped by more than 10,000 cases in the last six months. o The Congressional Budget Office and the Office of Management and Budget predict a decline in the national poverty rate between 2014 and 2022 of 8.2% and 5.8% respectively. Individuals with private insurance losing coverage (private drop) o Assumptions inconsistent with Maine report to CMS for a full decade of research on the childless adult waiver. The Alexander Group assumes that a large number of individuals will drop either private individual or employer based coverage if offered MaineCare under an expansion. This assumption is inconsistent with actual Maine data collected over the last decade in Maine DHHS reports to CMS regarding the childless adult waiver. Maine DHHSs First Year Report to CMS, prepared by the Muskie Institute, found that only 2.7% of new members had private insurance at the time of enrollment. The year one report stated that the vast majority of the NonCategorical Waiver (NCW) enrollees were already uninsured at the time they enrolled, suggesting that they had been forced out of private markets and into the ranks of the uninsured at some point before the NCW came on line. Each year thereafter these reports looked at this issue and found little evidence that substitution of public for private coverage. Maine DHHS Fourth Year Report to CMS continued to find little evidence of crowd-out, reporting that while rates of private coverage among new NCW enrollees had grown somewhat over the first three years of operation, they remained at very low levels (5%). Although Medicaid coverage
Prepared by Maine Equal Justice 1-14-2014

under the waiver group increased significantly the Maine DHHS Fourth Year Report found little evidence that substitution of public for private coverage fueled the growth of Medicaid among the target population. o Gruber report cited to at page 48 discusses coverage drop of 60%; however this number is associated with drop of family coverage. On page 28 of the Gruber report there is a clarification that crowd out is only about half as large when we consider individuals only. In light of the fact that the vast majority of individuals who would be eligible for coverage if Maine expanded Medicaid are childless adults, the reference to 60% crowd out here is misleading.

FMAP rate changes.. o Health Affairs article shows that Alexander Group assumption of current match rate throughout the period is already inconsistent with predictions for 2015. The release of per capita state personal income data by the Bureau of Economic Analysis (BEA) on September 30, 2013, permits the calculation of Federal Medical Assistance Percentages (FMAPs) for federal fiscal year (FY) 2015. An article estimating those rates was published in Health Affairs on October 1, 2013. That estimate showed Maines FMAP actually increasing with an expected fiscal impact of $8M in additional federal funds in FY 15. o 100% for childless adults. An actuarial analysis commissioned by Maines DHHS and recently forwarded to CMS confirms that Maine should qualify for the 100% match because the MaineCare coverage for the childless adults failed to meet the benchmark standard described in federal law.

Errors: Administrative costs overstated. The Alexander Group estimates the number of staff needed to implement MaineCare expansion as at 97 for a cost of $7.44M for SFY 14-15 (page 105). Yet, the fiscal note prepared by the non-partisan Office of Fiscal and Program review for LD 1066, last years expansion bill, determined that there were only 83 positions needed for a General Fund cost of $2,064,435, a federal share of $4,635,029, and a total cost of $6,699,46. Waiver analysis compares apples and oranges. The Alexander Report (page 21) claims that a Kaiser Foundation Report showed the wait list for Maines 1915c waiver programs to be almost two thousand while other New England States had a lower number of citizens waiting for services. However, upon reviewing this document the actual number of Maine people waiting for this is 1,082nearly half of the number claimed.

Prepared by Maine Equal Justice 1-14-2014

Moreover, two New England states do not offer these waivers at all (R.I. and Vt.) and New Hampshire appears to only offer this waiver for one group. This in part explains the lack of individuals waiting for service in these states. Charity care analysis faulty. The Alexander Group (page 47) asserts that expanding MaineCare for childless adults did not result in a noticeable reduction in hospital uncompensated care. The Alexander Report ignores three key factors affecting hospital charity care during that period, each of which had a strong effect on increasing charity care and overwhelming the downward pressure from the childless adult waiver. These factors included a downturn in the economy; changes in the private insurance market, particularly the dramatic increase in high deductible plans; and the fact that most hospitals increased their eligibility for charity care following the implementation of the childless adult waiver in 2002.

Whats missing from the report: Savings to the General Fund from expansion: No discussion whatsoever of offsets. The Office of Fiscal and Program Reviews fiscal note for 1066 included preliminary savings number of $5.9 M each year. The savings result from the fact that people who today receive some or all of their health care through state-funded programs will be eligible for 100% federal match in CY 2014, 2015, and 2016. Economic activity generated from infusion of new federal dollars

Prepared by Maine Equal Justice 1-14-2014